Court Unravels Win for Medicare Beneficiaries

(CN) – The 9th Circuit on Wednesday reversed orders that would have barred the government from demanding that patients disputing their bills reimburse Medicare up front. The three lead plaintiffs in the underlying class action were injured in car accidents or at work, and Medicare covered their hospital bills. Before they received any money for their injuries, the government sent them letters demanding reimbursement within 60 days of receiving their settlements. In each case, the patients were told to pay even as they challenged the government’s bills. They sued Kathleen Sebelius, secretary of the Department of Health and Human Services, claiming she overstepped her authority by demanding payment before their appeals had been resolved or their waiver applications processed. The Medicare patients further argued that the secretary’s demand violated their due-process rights. John Balentine, an attorney for one of the lead plaintiffs, also challenged Sebelius’ authority to force attorneys to withhold any settlement funds until Medicare gets reimbursed. U.S. District Judge David Bury sided with the beneficiaries and Balentine, and barred the government from demanding upfront reimbursements. The 9th Circuit, however, ruled that the lower court lacked jurisdiction, because the Medicare patients failed to present their claim to the agency before taking it to court. The lead plaintiffs “did not provide an opportunity for the Secretary to consider the claim that her interpretation of the secondary payer provisions exceeded her authority,” Judge Morgan Christen wrote for the panel. Because he is not a Medicare beneficiary, Balentine does not have to go through the same administrative channels, the court ruled. But it ruled against him on the merits of his claim, saying the government’s interpretation of the reimbursement provision is “reasonable.” We conclude the Secretary’s interpretation of the reimbursement provision is rational and consistent with the statute’s text, history, and purpose,” Christen wrote, reversing Bury’s second injunction. The 9th Circuit sent the case back to the district court for a ruling on the beneficiaries’ due-process claim.